Chapter 12

Competitive Pricing via Game Theory

About This Chapter

Chapter 12 continues our review of the revenue estimation section by explaining how the discipline of game theory can help us improve our pricing decisions by considering the decisions of our competitors. According to game theory, competitors who are using sales prices to seize customer traffic from each other are engaged in an interactive process by which external forces (i.e., the pricing decisions of others) can impact their own internal profits.

Thus, in this chapter, we explore how prices should be established under conditions of external market uncertainty. The key insight is that, under such circumstances, organizations should always analyze their situations from their ...

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